Volt’s Price Drop Isn't Like Smartphone Cost Cut

Is the EV a dead horse the auto industry is flogging, or is it the loss-leading investment carmakers have to make if they hope to have a future?

The price drop, clearly, has been working for Nissan thus far, as it is selling more Leafs this year. According to the company, Nissan Leaf sales in July were 1,864 units, up 371.9 percent over last year. Year-to-date sales are 11,703, marking an increase of 230.3 percent over the same period in 2012.

Indeed, Nissan has been selling consistently about 2,000 units per month since March (when the production of Leaf in Tenn. moved in full swing), in contrast to January and February this year when the company sold only about 650 units a month.

There is no doubt about an overall sales increase of EVs in the United States.

In mid-July, the US Dept. of Energy pointed out that plug-in electric vehicle (PEV) sales tripled from about 17,000 in 2011 to about 52,000 in 2012. During the first six months of 2013, Americans bought some 40,000 plug-in electric vehicles (PEV), more than twice as many as during the same period in 2012.

Further, according to Environmental News Network, the Electric Drive Transportation Association has released figures showing that US electric cars outsold their hybrid counterparts in the first half of 2013 by 22,712 to 18,335.

EVs ain't smartphones
While these data points help illustrate the momentum behind EVs, the reality is that combined sales of EVs and plug-in hybrids still total less than 1 percent of cars sold in the US.

While EV advocates see in that momentum the automotive industry's play to reach a critical point to turn EV into a mass market car, EV skeptics find the 1 percent penetration in overall sales of the US market hopelessly slow and seriously flawed.

In reading a number of media reports about GM's latest price cut on Chevy Volt, I came acroos an article by Automotive News in which Jon Bereisa, CEO of consulting firm Auto Lectrification and the systems architect for the Volt during its creation, was quoted:

People forget that this was brand-new technology. Of course the price will fall... The price of your smartphone doesn't go up. It goes down.

Well, the problem, unlike smartphones, is the technology curve to bring down the cost of basic technology building blocks (such as batteries) for EVs looks so much steeper than any smartphone component. Unlike smartphones, with which Chinese fabless chip companies, China-based OEMs, and the Chinese market have played a major role in creating the $50 smartphone boom, US and Japanese carmakers can't count on China to boost their numbers.

The Los Angeles County Metropolitan Transportation Authority (Metro) Board of Directors approved a contract with BYD Motors for the manufacture and delivery of up to 25 new all-electric buses as part of a $30 million clean air bus technology pilot project.

I looked at this in detail several years ago. I compared several types of small vehicles including gas, hybrids, pure electric and the volt. The question was payback. The Leaf did quite well especially for owners who had access to free charging at work. It is certainly not for everyone but some can do very well with it. CNG has lower fuel costs but limited fueling options plus it carries at least a 6K price premium.

An electric car makes a lot of sense for short distance, stop and go driving, in a place like NYC where I live. Beyond that, the equation changes. Electric cars don't have the distance capabilities gasoline engines have, the charging infrastructure doesn't exist, and you can refill a gas tank a lot faster than you can recharge an electric car's batteries. If I were someone like Zipcar, I might consider getting some to rent, but I'm dubious about how many locals might buy one.

And while I expect the technology to improve, I don't ever expect to see an electric 18 wheeler.

I know one guy who owns a Volt, and I'll have to ask him about his reasons and experience. He's a tech. so I suppose the geek factor was a major reason.

Another question for him will be the impact of charging on his electric bill.

The one thing no one talks about is that a 100% EV uses more fossil fuel than a normal gas powered vehicle. It takes energy to charge your EV up and more than likely that comes from a coal powered electric plant.

The ony reason Honda, GM and FORD et Al. are pushing EVs are because of laws. They are literally giving them away on CA because there is a state law that X% of a company's cars have to be zero emission or they cannot sell regular cars in CA. The EV is not ready for prime time. It is being forced on the public by laws that are impossible to follow except by selling EVs below cost.